4-Year Office Space Excess Found in Orange County

Orange County will need at least four years to work off its excess office space, even though new construction is declining rapidly, according to the latest REIS report, a New York-based real estate information service that studies the nation’s major markets.

The report says new office space reaching the market this year will decline by more than 26% from 1986, but will still far outpace net absorption.

New construction will decline from last year’s 6.39 million square feet to an estimated 4.7 million square feet in 1987, and to 2.6 million in 1988. But annual net absorption is unlikely to rise much above last year’s 3.1 million square feet, which was the second highest in the county’s history.

The countywide vacancy rate stands at 24.5%, and ranges from about 28% in the Airport/Irvine area to about 17% in the south county. The west central district of Cypress, Garden Grove, Fountain Valley, Los Alamitos, Huntington Beach and Westminster shows a vacancy rate of about 27%, as does Anaheim and vicinity.

The report observes that projects announced for completion after 1987 total about 10 million square feet, but that ground-breaking dates for many remain unscheduled.

The report cites growing interest from Pacific Rim countries, especially Japan, as a factor that will help support demand. However, the report also notes that Japanese contractors will build many new projects.